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Study Lays Out Consequences of West Coast Port Strike as Deadline Looms

June 27, 2014

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As negotiations continue for a new contract agreement covering 13,600 dockworkers at 30 ports stretching from San Diego, Calif., to Bellingham, Wash., a new shows the U.S. economy could lose as much as $2.5 billion a day if a prolonged West Coast port shutdown occurs.

The study, conducted for the National Association of Manufacturers and the National Retail Federation by economists at the Interindustry Forecasting Project at the University of Maryland, found that the economic repercussions of a port closure would grow with time.

“A protracted dispute between the negotiating parties could lead to reduced or shuttered terminal operations for an extended period,” the joint study warned. “If such disruptions occur, the economic impact would be significant and widespread.”

It said a 5-day stoppage would reduce the nation's gross domestic product, which is the value of the total output of good and services, by $1.9 billion a day, along with disrupting 73,000 jobs and costing the average household $81 in purchasing power.

A contract between West Coast dockworkers and ocean shipping companies and terminal operators is set to expire on June 30, fueling concerns there could be a strike by longshoremen or a lockout by management. There have been reports the contract has been extended for an unknown period of time allowing the talks to continue, but groups representing both sides have yet to issue a public statement about this.

Concerns about a possible strike have led some shippers to divert some or all of their cargo away from West Coast ports, along with having contingency plans if a strike or lockout happens. Others have no backup plans.

The last major West Coast port disruption occurred in 2002, when management locked out dockworkers for 10 days until then-President George W. Bush ordered the two sides back to work under the Taft-Hartley Act. That shutdown was estimated to cost the U.S. economy several billion dollars.

Such a repeat would reduce the nation's GDP $2.1 billion a day, disrupt 169,000 jobs and cost the average household $170 in purchasing power, according to the report.

“It is important for the parties at the table as well as others to fully understand the economic consequences of a port disruption,” said NRF President and CEO Matthew Shay. “Any supply chain disruption, whether it’s a port slowdown or outright stoppage, would cripple international trade, stymie supply chains and hurt domestic employment and consumer spending. For retailers and their customers, a port closure would mean a delay in back-to-school and holiday shipments that could significantly drive up consumer prices.”

 

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